SebastienBonny
Member
Looks like it’s important to follow the stock price in time to keep gaining some premium.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Yeah, this job is far from “passive income“
It's passive, as in "sometimes I just have to sit there and take the beating" passive. The next resistance is 127. It's a pretty strong resistance but if CPI comes in cool, I don't think it's gonna have any problem overcoming it. When 127 goes, 144 will be next and I do expect us to get rejected there the first time.
I think it's too early to call for a faceripper. We've just flipped the momentum to bullish on the 2h timeframe which means we're safe till at least end of Wednesday. A lot of healing hasn't yet been done so I don't think we're gonna have a faceripper till at least one of these things happens: 5 seater MY gets included in the IRA or a blowout ER. Right around 127 is where I think those of us who are facing margin calls need to do some hedging. Then much more hedging at 140.
Thanks to the buyers powering the morning rally, was able to sell some CC:
- 13Jan23 $116 at $8.24 (a buy-write at cost)
- 20Jan23 $142 at $0.92 (at 15% OTM vs. previous norm of 10% during this high potential period)
The challenge I have now is that at ~155 I sold Jan 2025 350's which are now Jan 2025 170's.
Rolling those back up is way more costly than when I rolled down to save the account. So I am looking for a strategy here? Wait for Jun 2025 and roll up and out there?
@dl003 how else would you recommend those of us having DITM Puts and CC hedge?
Rolling those back up is way more costly than when I rolled down to save the account. So I am looking for a strategy here? Wait for Jun 2025 and roll up and out there?
@dl003 how else would you recommend those of us having DITM Puts and CC hedge?
At that point I'll probably sell 170C and buy 120P with the premium; 2 weeks out.
I believe the markets dumping at 19:27CET is due to Samsung issuing a profits warning on poor demand for their chips...
EVNow
Well-Known Member
With so many of us selling 125 calls, this was inevitable. I sold 125/130 and 130/135 spreads.
On Friday, decided to sell call spreads because the SP was raising. Though I’ll sell put spreads on Monday. Obviously should have done the opposite.
Or stick the plan of not selling anything until Tuesday….
So looks like we dumped because chips were on shortage and months later dumped again because there were too many chips. Gosh, stonks sure are hard.
bballshinobi
Member
Interested in what you guys do with the buy-write strategy. Can anyone share some links to the posts in this thread discussing buy-writes? Thanks!
DO NOT FORGET:
Fed Speak Tomorrow.
The Lord Himself.
And not to be forgotten:
Fed Speak Tomorrow.
The Lord Himself.
| 9 am | Fed Chair Jerome Powell speaks in Sweden |
And not to be forgotten:
| THURSDAY, JAN. 12 | |||||
| 7:30 am | Philadelphia Fed President Patrick Harker speaks | ||||
| 8 am | St. Louis Fed President James Bullard speaks |
I closed some of my cc's at 50% profit.
Maths and greeks can only go so far. In good times, we could shuffle puts and calls around and still be left with some breathing room without taking a lot of risks of the stocks running in a direction opposite of what we want. I'm talking about the good old days when we didn't need TA to decide what to do. Unfortunately it is different now. To fix these positions we have to attempt to time the market which means significant risk taking.
I don't think you should wait for June 2025 to roll them up. This is what I'm reading from the chart:
On the daily timeframe, we are slowly exhausting the selling pressure. This means we're not out of the woods yet but getting there. On the smaller timeframe, we already turned bullish but are consolidating short term gains into Thursday CPI reading. If you're stuck with low strike leap CCs, this might look like pain, but it's also an opportunity to fix your DITM short puts. The stock is going to run up before running out of steam. Unless something drastic happens like TSLA posting 30% gross margin for Q4, the IRS fixes its guidance, and S&P upgrades TSLA to IG in the same week, we will retrace deeply once that local top has been made. It happened in October 2019 - March 2020, March 2021 - May 2021, January 2022 - March 2022, etc... that's how market psychology works. At this low of a stock price, morale is extremely shaky and people will dump it at the first sign of trouble "oh crap, here we go again. New lows incoming. Elon just tweeted this / The IRS just did this / China just said this." If you're trying to get out from underwater positions, you need to be able to anticipate this top and get out first, which means going against your own instincts and beliefs in Tesla's strong fundamentals.
It is at that point that we will need to make the difficult decision to cut some of our losses on those puts so that when it goes down again, either to make a new low or to consolidate recent gains, we can then roll those low strike leap CCs up without as much constraint. Still, it is easier said than done and I can't promise to get the local top right, much less the subsequent bottom. At some point, we need to accept that we're going to get some of it wrong but that's the price we pay for our past mistakes. If we can't do this, then we're basically revenge trading, trying to recoup every penny lost and that more often than not leads to steeper losses.
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A lot of TMC content has been written in recent months that I believe you can find in TMC search, and also check online sources. Of course, the basic idea is to buy shares and immediately sell CC at or above the purchase price, then accumulate premiums and possibly capital gains by letting expire or assign and/or rolling. The trick is to be able to identify downturns before SP gets much below purchase and be willing to let the shares go, or hold longer term. At current prices, the latter approach could make sense.
(responding to the post you responded to @CHGolferJim )
I'll add - my own approach to b/w when I was (or will) be doing them, is to sell the CC as an ITM cc. The rationale is that I'm attempting to earn the time value. By selling ITM, I gain some resilience to a move down in the share price. Something like buy shares at 121 and sell the 110 call. There's probably $3 or $4 worth of time value there, in an option priced at $15 (I'm making up numbers to illustrate the idea).
If the shares finish anywhere and everywhere above 110, I can choose to take assignment on the call and sell the shares, netting out the original time value (what I wanted to earn).
I also have the option of rolling that 110 call. Say the share price is 112 when I roll. It's still $2 ITM - maybe I wait and there is $1 in time value, so I'm rolling out of a $3 call. That $3 is $12 better than what I sold, so I'm realizing a $12 gain in this instance. However I still have shares I paid $121 for so its not free money. But hey - could roll to that same 110 strike.
The problem, whether selling ITM or OTM calls to start the chain of b/w and call rolls - if the shares fall to 190, then the call expires worthless (good); I earn all of that $15 I sold for up front. However I now have $121 shares that are worth $190. This is what happened to some of us, except we bought shares at 290 or something, and we still have them, but there aren't any cc's worth selling that could possible make up the loss/share. So eat the loss and start anew, or hold the shares and wait.
Is the hedging because after $127 (and $140) it’s almost near definitely (well, high probability…) TSLA is revisiting $100 (or lower
) again and therefore we’ll need the hedges to protect our accounts?(FWIW I’m always surprised by this market psychology, either it’s worth $140 or $100; that it swings so manically within a few days/weeks is just nuts for logical thinkers.)
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